Jobless Rate Falls to 8.9% as 192K Jobs Added

Today’s jobless report is a good news bad news thing, first the good news… From Bloomberg:

U.S. employers added 192,000 workers in February, amid an improving economy and more seasonable weather, and the unemployment rate unexpectedly declined to 8.9 percent, the lowest level since April 2009.

So what’s the bad news? In short the primary reason unemployment is falling is that labor force participation rate is at a 27 year low. We have to go all the way back to March 1984 to find a participation rate this low. As Ed Morrissey notes:

The lower denominator makes the overall jobless rate look better than it should. If we were at the same participation rate as we saw in mid-2008, we would probably add two or three points to the unemployment rate. And at some time, those workers will re-enter the job-seeking population and the rate will rise accordingly.

So while the media is trumpeting the good news about the falling unemployment rate you might want to ask yourself why there’s no mention of the shrinking workforce or the gross disparity between the Department of Labor report and private-sector surveys such as Gallup. Which shows unemployment at 10.3% and underemployment at 19.9%.

The short answer is that the DoL has been steadily shrinking the work force by eliminating those who fall off unemployment rolls without finding a job or who failed to check-in with a state employment office in the past month. This little bit of statistical voodoo grossly understates the level of real unemployment. It’s easy for the Bureau of Labor Statistics to pretty up the numbers when they’ve chopped 500,000 from the workforce in their latest revision.